Weekly brief

Weekly brief

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Currency update

USD: Thursday was a reassuringly normal day for financial markets.  Equity prices eventually stabilized and major-current movements were mostly modest. The USD did not have a great deal of fun though, as it headed gently lower against the EUR for an eventual loss of 0.4%. On this occasion it was the US economic data that did for the dollar.  Initial jobless claims were more than expected while every one of the half-dozen inflation measures came in below forecast. The headline number was down from 2.7% to 2.3% and the "core" reading, excluding food and energy costs, was unchanged at 2.2% having been expected to tick higher. It set investors wondering if the Fed might consider slowing the pace of its tightening process.

EUR: A complete lack of economic data from the euro zone and Germany left investors with nothing to look at other than the accounts (don't call them minutes) of the European Central Bank policy meeting which took place on September 12-13. They showed the ECB to be remaining calm about the risks posed by the Trump trade war: It did consider describing those risks as "tilted towards the downside" but eventually settled for leaving the wording of its statement unchanged and depicting the situation as "broadly balanced". There was no mention of Italy's deficit budget because the episode had yet to blow up when the ECB Governing Council met.  

CAD: The CAD had a better day on Thursday than it had had the previous day but that was not exactly a big ask. It drifted higher against the USD, leaving the Greenback with a 0.3% loss on the day. The new housing price index was the only Canadian statistic to grace investors' screens and it was spectacularly ordinary, unchanged in August and 0.4% higher on the year.  An overnight pickup in oil prices helped the case for the CAD, though WTI was still 50 cents lower on the day.

GBP: Britain's pound ran out of steam somewhat, though it still managed to take half a cent - 0.5% - off the USD. The Brexit narrative was more muted, with no new promises of deals that are "just around the corner" and there were no UK economic data to inspire buyers. The Bank of England's quarterly Credit Conditions Survey was rather subdued: it showed a reduced appetite for risk among banks, suggesting they would scale back their mortgage lending in the next three months.  

JPY: With the equity sell-off over and done with - for now at least - the yen retreated into its corner to watch the world go by. It was unchanged on the day against the USD. There was just one Japanese ecostat overnight - the Tertiary Industry Index, which monitors the domestic services sector.  It was up by a monthly 0.5% and nobody noticed. 

USD help back by below-forecast inflation data

USD help back by below-forecast inflation data

EUR enjoys unprovoked 0.4% rally

EUR enjoys unprovoked 0.4% rally

CAD prospers as panic subsides

CAD prospers as panic subsides

GBP slows in line with news stream

GBP slows in line with news stream

JPY unchanged and uninteresting

JPY unchanged and uninteresting

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